Apple paid only 2% corporation tax outside the US

Apple has become the latest company to come under the spotlight over how much tax it pays, after it was revealed that the iPhone maker's tax bill was less than 2% of its profits outside of the US.

Filings with US regulators have revealed that Apple paid $713m (£445m) in the year to September 29, 2012, on foreign pre-tax profits of $36.8bn, a rate of 1.9%. This was down from 2.5% tax paid overseas in the previous year.

It was noted that the corporate tax rate is zero in Nevada, compared with 8.84% in California. Alongside California, the report said that Apple has "avoided millions of dollars in taxes" in 20 other states.

Apple has legally allocated around 70% of its profits overseas, mostly to countries where the tax rate is considerably lower than in the US, according to the company's own filings.

The world's biggest technology firm has set up subsidiaries in various low-tax havens, such as Ireland, the Netherlands, Luxembourg and the British Virgin Islands. The report said that some of these bases are "little more than a letterbox or an anonymous office".

The New York Times also noted that technology companies such as Apple and Google are better placed to reduce their tax bills because their income primarily comes from digital products or royalties on patents, both of which can be easily shifted to tax friendly states or countries.

In contrast, it is much harder to shift the collection of profits from the sales of physical products, such as a car, to a tax-haven area.